Chris Hohn Quotes
104 Chris Hohn Quotes
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[In April 2008.] We are unlikely to make further investments in Japan and warn investors everywhere to avoid Japan as a place to invest.
Chris Hohn
[In April 2008 on the Japanese government blocking TCI’s plans to increase it’s 9.9 percent stake in J-Power.] It doesn't matter about the valuation case. We found a bulletproof company but you can never see any of that cash because corporate governance is a disaster. Japan is a bad place to invest if they don't allow activist shareholders to ensure corporate governance.
Chris Hohn
[In April 2008.] J-Power is a cash monster. In a country with 1 per cent interest rates it generates a 20 per cent free cash flow yield. It should be trading at three times the current share price.
Chris Hohn
[In April 2008.] We don’t want to be confrontational all the time – it’s tiring – but I have a fiduciary duty to my investors.
Chris Hohn
[In June 2008 on CSX Corp.] We regret that the company has made this into an apparent contest. We are merely seeking to exercise our right to seek board membership by a democratic shareholder vote. CSX wants to paint the picture that this will be a board at war if our slate of directors gets approved. But these are very serious, thoughtful people.
Chris Hohn
[In October 2008.] The company's valuation has collapsed this year, and shareholders are suffering. We're frustrated with Deutsche Borse.
Chris Hohn
[In October 2008.] This has been a brutal period for long-biased investors like us, who have limited hedges, and it is painful to lose money. I think the key for us is to maintain our core philosophy of long-term investing. As long as we still believe in our positions, we won't let the markets change our minds.
Chris Hohn
[In October 2008.] While we're not going to rule out taking an activist stance on existing investments, like Deutsche Borse, we are going to be more cautious about it when we look at making new investments, because quite frankly activism is hard. It has been very profitable for us, but it is unpredictable and expensive. Just look at CSX. We've already spent over a year trying to effect change and paid out more than $10 million in legal fees on the proxy fight.
Chris Hohn
[In October 2008 on shareholder activism.] When people say that what we do is bad and wrong, we ask them, 'Why is shareholder democracy bad and wrong?' Shareholders are owners of companies, and they always have a choice. They should exercise their rights.
Chris Hohn
[In October 2008 on often looking for midcap to large-cap monopolistic companies that are undervalued on an absolute basis, have significant free cash flow and operate in industry sectors where there is a high barrier to entry.] A moat.
Chris Hohn
[In October 2008.] Corporate governance in Japan is nonexistent. The government passes laws to stop foreign investors, but it doesn't do anything about Japanese companies adopting poison pills and increasing their cross-shareholdings to insulate themselves. Until it does, the overriding message is: Don't bother to invest in Japan. It is a stagnant economy and stock market.
Chris Hohn
[In October 2008. Warren] Buffett has always said that he looks for good management teams, because they're easier to work with. We've often done just the opposite. We've frequently looked for excellent companies with underperforming management, Deutsche Borse, Euronext, CSX. Activism has been profitable for us, but it's getting much harder; the political and regulatory environment is changing.
[In October 2008.] If Eurex were a stand-alone company, a pure play, it would be valued at 25 times forward expected earnings. [Deutsche Borse, by contrast, is valued on a blend of its three businesses at ten times forward earnings.]
Chris Hohn
[In October 2008.] The current political and regulatory environment has become dangerously passive, and shareholders are already the worse off for it, Just look at the boards of Citigroup, Merrill Lynch and UBS: You could argue that they have utterly failed their shareholders in the current financial crisis , but their boards are still very much intact.
Chris Hohn
[In 2009.] Banks today make more money from proprietary trading than commissions as an agent, so they are heavily incented to try to see and take advantage of the flow of buy side participants. Even in the case of direct market access, banks have the ability to see that flow, and the bank’s head of trading can walk into the room where DMA [Direct Market Access] is taking place, and there’s really actually no need at all to have direct market access through an investment bank.
Chris Hohn
[In 2009.] I think this is a real critical point that is never really talked about. In a world where banks see flow and are able to use that information to trade against the user, you cannot have immense value. It’s a reason that investment banks make billions of dollars of profits from trading. They see flow and that ends up working against the client. That is a very important reason that exchanges play such a critical role.
Chris Hohn
[In October 2012.] The fund has compounded about 15% a year over the last nine years…
Chris Hohn
[In October 2012.] It’s a global equities fund, long-biased, opportunistic. We invest in a variety of companies within a narrow field of sectors, infrastructure, brand consumer products are very important to us and we have a deep value approach and a deep research approach and it’s a concentrated investment strategy.
Chris Hohn
[In October 2012.] We are very different to pretty much everything else they look at and see. We’re not a market neutral fund, we’re not a macro fund, we’re deep value equity, global in nature, bottom up, and we fit and we do activism and so we can fit in an equity portfolio, we could fit in a hedge fund portfolio, we could fit in an event driven portfolio, we could fit in an opportunistic portfolio, and we really let investors decide how they categorise us.
Chris Hohn
[In October 2012.] I started off early in my career in private equity at Apax and I learnt there that this approach of very deep research as though you are owning a company very long term serves one well as an investor, because the value of a company is not in one year’s cash flows but in 20 years of cash flows and so we think about our investments, not what they will look like in one quarter or one year, but what they will look like in 10 and 20 years’ time. And so the only way we can actually do that is to really deeply understand the fundamentals of the company and understand the barriers to entry, and those could come from hard assets that are irreplaceable like hydroelectric dams, it could come from brands like strong branded consumer products companies or it could come from intellectual property.
Chris Hohn
[In October 2012.] There are a limited number of great ideas out there and if you allow yourself to be concentrated in those, you’re going to add a lot more alpha than if you run 100 stock portfolio with every position being 1%.
Chris Hohn
[In October 2012.] Concentration of the portfolio is central, deep analytical process is central and a focus in a limited number of industries which we get to know inside out is also central to the alpha generation.
Chris Hohn
[In October 2012 on shareholder activism.] It’s something that can play a powerful tool for some companies; it’s not central at all to what we do, it’s something that we’re happy to utilise where it can add value, but it’s a tool not a strategy…
Chris Hohn
[In October 2012.] I think that shareholders need to be more embracing of activists and welcoming because they play an important role to correct poor governance and I think that companies that completely ignore activists should be treated poorly by investors because there’s a role for activism and it should not be looked down upon.
Chris Hohn
[In October 2012.] We are really out and out stock pickers. We really focus on finding companies that have more limited economic sensitivity and are such deep value and deeply discounted that we can make money over time despite poor economies or weak economies…
Chris Hohn
[In October 2012.] We think investors often throw out all companies or tar all companies with the same brush, and yet some are less economically sensitive than they perceive. Disney was a big investment for us over the last few years and investors thought it was highly economically sensitive but our analysis was that the structural pricing power of ESPN was not economically sensitive at all.
Chris Hohn
[In October 2012.] Buffett has an expression that he uses that, uncertainty is an investor’s friend, by allowing us to buy into companies cheaply, and I believe that to be the case and so Europe’s uncertainty is allowing us to put more and more of the portfolio into Europe. We have probably a majority of our investments today in Europe and we’re getting extremely cheap bargains there despite the weakness of the economies and the political risk.
Chris Hohn
[In October 2012.] Longer term themes that are critical for investors include climate change which is to my mind a huge, terribly bad problem for the world. I think it’s going to cause massive food shortages and water shortages and economic damage and I think it’s probably for me the number one theme that investors have not understood.
Chris Hohn
[In October 2012.] I think the debt problems of the developed economies are going to cause long periods of economic weakness, potentially a decade or more, and so triple deleveraging of banks, consumers and governments is going to weigh on economies for long, long periods of time.
Chris Hohn
[In October 2012.] We need to find companies that can do well despite weak economies so companies with structural pricing power is a core theme that we look for and I think we are going to see policy driving markets in a volatile way and it’ll be increasingly like Japan and was for 20 years and that means interest rates are going to stay close to zero for extremely long periods of time.
Chris Hohn
[In October 2012.] Strong companies that have the ability to grow their earnings despite a weak economy are going to be extremely valuable. They’re going to trade at very high multiples eventually and so it’s ever more important for investors to be able to distinguish between the companies that are winners and the companies that are losers because there will be both.
Chris Hohn
[In October 2012.] TCI invests in great businesses, at significant discounts to intrinsic value and takes a long-term view.
Chris Hohn
[In October 2012.] TCI focuses on high barrier to entry industries such as infrastructure, utilities, tobacco, branded consumer products, aerospace, media content and mission critical software.
Chris Hohn
[In October 2012.] TCI adds value through engagement with management teams and expertise in governance.
Chris Hohn
[In October 2012.] TCI is a value orientated, fundamental investor which: Invests globally in strong businesses with sustainable competitive advantages; Conducts deep fundamental research; Adopts a long term time investment horizon; Takes a private equity investment approach to the public markets; Creates value by constructive engagement with management; Drives outcomes by using activism when appropriate; Concentrates the portfolio in a limited number of investments; May invest opportunistically in dislocations, corporation transformations and special situations.
Chris Hohn
[In October 2012.] TCI focuses on industries with sustainable competitive advantages and pricing power.
Chris Hohn
[In October 2012 on what makes TCI different.] Analytical focus on deep understanding of ‘business models.’ Concentrated high conviction portfolio (10-12 companies). Experts in high barrier to entry industries with pricing power (monopolies, duopolies, oligopolies). Constructive engagement with management to realize potential and create value. Expertise in corporate governance. Longer term investment horizon.
Chris Hohn
[In October 2012.] TCI often invests in good businesses which have cheap valuations because they are complicated by corporate governance risk which is misunderstood and over discounted by the market. Today the majority of the portfolio is in special situations investments (privatisations, turnarounds, corporate transformations).
Chris Hohn
[In October 2012.] Fund overview at September 30, 2012. NAV of US$4.6bn as of September 30, 2012. Portfolio 47% Europe, 18% US, 27% Asia and Australia, 8% Latin America. 11 positions (2 public activist positions). Typical holding period: 2–5 years. Typical gross exposure: 80-150%. Shorting: infrequent. Side Pockets: None.
Chris Hohn
[In October 2012.] Investment Criteria: High barriers to entry; High and consistent returns on capital; Structural pricing power and growth; Hard asset backing; Defensive businesses which are less sensitive to economic downturns; Potential to transform; Low valuations; Strong brands; Catalysts for value recognition; Misunderstood corporate governance risk; Exposure to fast-growing emerging markets.
Chris Hohn
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